May 2012 Hope Board Meeting

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May 2012 Hope Board Meeting

  1. 1. Hope Christian Community Foundation exists to serve Mid-South donors and ministries to facilitate the building of God’s kingdom in our community and throughout the world. Our mission is to encourage philanthropy and increase giving. Hope Christian Community Foundation www.hopeccf.orgWednesday, May 23, 12 1
  2. 2. BOARD OF DIRECTORS MEETING MAY 24, 2012 Financial Highlights for Fiscal 2012 (12 months ended April 30, 2012) Approval of Budget for Fiscal 2013 Charitable Gift Annuities Other Matters Hope Christian Community Foundation www.hopeccf.orgWednesday, May 23, 12 2
  3. 3. FINANCIAL HIGHLIGHTS Hope Christian Community Foundation www.hopeccf.orgWednesday, May 23, 12 3
  4. 4. Assets at April 30,2012 Were $107M, the Same as the Prior Year 107.2 107.4 71.0 $80 70.7 67.4 Total Assets 52.9 $60 49.7 Millions $40 31.7 22.3 $20 12.4 6.5 3.3 $0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Hope Christian Community Foundation www.hopeccf.orgWednesday, May 23, 12 4
  5. 5. Grants Made for the Fiscal 2012 Were $21M Bringing the Total Since Founding to $213M+ 213 191 $200 156 Cumulative Grants $150 Thru 04/30/12 125 Millions 92 $100 73 57 47 38 $50 29 15 8 $0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Hope Christian Community Foundation www.hopeccf.orgWednesday, May 23, 12 5
  6. 6. Change in Assets for 12 mos. ended 4/30 fy2011 fy2012 Assets at Beginning of Fiscal Year $67.4 $107.2 New DAFs Opened 32.1 1.6 Contributions to DAFs 23.8 24.6 $ Millions Grants from DAFs (29.2) (21.2) Agency fund deposits .9 2.0 Agency fund withdrawals (1.5) (.8) Net Investment Earnings 14.1 (6.1) Expenses + other-net (.4) .1 Assets at April 30 (in millions) $107.2 $107.4 (DAF = Donor Advised Fund) Hope Christian Community Foundation www.hopeccf.orgWednesday, May 23, 12 6
  7. 7. CHANGE OF ASSETS DURING FISCAL 2012 Thru 04.30.12 Assets were unchanged for the year Stock market & other investments negatively impacted assets by $6.1M offset by net cash inflows from gifts received vs. grants paid of $3.4M, new funds opened of $1.6M and net agency fund deposits of $1.2M Gifts received total $26.2M, down 0.01% from last year Grants made were $21.2M, down 27% from last year(due to one large donor which is a business) Hope Christian Community Foundation www.hopeccf.orgWednesday, May 23, 12 7
  8. 8. Hope Asset Allocation at April 30, 2012 8% 10% 37% CASH Fixed Income Equities Alternatives 46% Hope Christian Community Foundation www.hopeccf.orgWednesday, May 23, 12 8
  9. 9. INCOME STATEMENT FISCAL YEAR ENDED APRIL 30, 2012 Hope Christian Community Foundation www.hopeccf.orgWednesday, May 23, 12 9
  10. 10. 12 months ended April fy 2012 fy 2012 fy 2011 30 (000) Actual Budget Actual Administrative Fee $544 $555 $512 Income $ Thousands Interest Income 134 132 131 Total Operating $678 $687 $642 Revenue Operating Expenses 507 493 474 Operating Income $172 $194 $168 Contributions 5 0 2 Net Income $176 $194 $170 Hope Christian Community Foundation www.hopeccf.orgWednesday, May 23, 12 10
  11. 11. HIGHLIGHTS OF YTD FISCAL 2012 Income lower than budget due to lower average assets less than estimated Expenses higher than budget due to cost of IRS audit and compensation expense Fee income higher than last year due to higher average assets Expenses higher than last year by $32k due to higher total compensation ($18k or 4.6%), IRS audit($3k), website costs ($4k) and expense of new brochure($9k) Net income for the year of $176,00 compares with budget of $194,000 and $170,000 last year Hope Christian Community Foundation www.hopeccf.orgWednesday, May 23, 12 11
  12. 12. CASH POSITION Cash total is $672,000 Operating cash equals $545,000 Hope for Memphis fund cash equals $93,000 total, with obligations of $91,000 for a surplus of $2,000 Including surplus operating cash, Hope for Memphis Fund would be $47,000 Generous Community Initiative fund equals $34,000 Hope Christian Community Foundation www.hopeccf.orgWednesday, May 23, 12 12
  13. 13. FINANCIAL OUTLOOK Hope’s revenue & bottom line is driven by fees on assets and interest rates Stock market has been very volatile over the last 12 months decreasing 20% for the first 5 months and then increasing by 27% the last 7 months; assets at $107M compare to $92M last September. Volatility seems to have returned recently. Short term interest rates appear to remain at low levels for the foreseeable future At current asset levels, monthly income should be in the $15- $20K range Hope Christian Community Foundation www.hopeccf.orgWednesday, May 23, 12 13
  14. 14. PROPOSED BUDGET FOR FISCAL 2013 ENDING APRIL 30, 2013 Hope Christian Community Foundation www.hopeccf.orgWednesday, May 23, 12 14
  15. 15. BUDGET ASSUMPTIONS 25 new funds opened Average assets of about $110 million Slight decline in interest income as low rates continue 3% salary increases at 01/01/2013 3% increase in health insurance costs 7% decrease in fixed expenses and discretionary expenses: elimination of expenses for new brochure and IRS audit incurred in previous year Hope Christian Community Foundation www.hopeccf.orgWednesday, May 23, 12 15
  16. 16. Twelve months ended 2013 Budget 2012 Actual Change April 30 (000) +2.8% due to higher Administrative Fee Income $559 $544 average assets Interest Income 126 134 low interest rates continue Total Operating Revenue $685 $678 unchanged due to higher compensation & health Total Operating Expenses 507 507 insurance by 3% offset by lower audit and brochure costs Operating Income $178 $172 +3.5% Contributions 0 5 Net Income $178 $176 Hope Christian Community Foundation www.hopeccf.orgWednesday, May 23, 12 16
  17. 17. CHARITABLE GIFT ANNUITIES Hope Christian Community Foundation www.hopeccf.orgWednesday, May 23, 12 17
  18. 18. CHARITABLE GIFT ANNUITIES (CGA) CGA has two components: an fixed annuity payment for the lifetime of the annuitant & a charitable gift. For a conventional CGA, the charitable gift is designed to be approximately 50% of the cost of the annuity remaining when the annuitant (person receiving annuity) dies Example: A $100,000 CGA for a 70 year old paying 5.1% is designed too have about $50,000 remaining when that person dies 16 years later (according to mortality table) Issuer of conventional annuity thus assumes two risks: longevity risk and investment risk Hope Christian Community Foundation www.hopeccf.orgWednesday, May 23, 12 18
  19. 19. HOPE CGA PROGRAM We propose to issue CGAs and then re-insure them by purchasing a commercial annuity In the previous example, the cost of a commercial annuity would cost approximately $70,000 leaving a balance of $30,000 immediately available for a charitable gift We would initially get competitive bids for re-insurance from 3 highly rated companies: Mutual of New York, MetLife or Mutual of Omaha The charitable gift could go to the donor’s donor advised fund or the church or charity of his choosing We would receive 5-10% of the charitable gift as a contribution to the Hope for Memphis Fund Hope Christian Community Foundation www.hopeccf.orgWednesday, May 23, 12 19
  20. 20. HOPE CGA PROGRAM Advantages: 1. Eliminate longevity risk 2. Eliminate investment risk 3. Immediate gift rather than waiting until death 4. Substantially reduce back office costs since insurance company would mail checks and be responsible for tax reporting Disadvantages: 1. Some people will die earlier than expected 2. The liability for paying the annuity remains a Hope liability in the event the insurer goes out of business Hope Christian Community Foundation www.hopeccf.orgWednesday, May 23, 12 20
  21. 21. HOPE CGA PROGRAM POLICIES Minimum Age: 65 Minimum annuity amount: $25,000 Reinsurance: All will be reinsured; however, to maximize donor’s charitable deduction, we will tell donor that we may reinsure Annuity rates offered shall be those set by the AGCA (American Council on Gift Annuities) Hope Christian Community Foundation www.hopeccf.orgWednesday, May 23, 12 21
  22. 22. HOPE CGA PROGRAM STATUS We have applied to the state of TN to issue annuities; assuming no problems with our application, we expect approval in 2-3 weeks We will spend approximately $1,300 to get in the business including state application cost and necessary software In a related move, we will spend approximately $1300 to add a Planned Giving Section to our website designed by Sharpe and Company We are asking for board approval to move forward with this plan Hope Christian Community Foundation www.hopeccf.orgWednesday, May 23, 12 22
  23. 23. OTHER MATTERS Hope Christian Community Foundation www.hopeccf.orgWednesday, May 23, 12 23
  24. 24. NEXT SCHEDULED BOARD OF DIRECTORS MEETING September 27, 2012 January 24,2013 Hope Christian Community Foundation www.hopeccf.orgWednesday, May 23, 12 24

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